Edward Helmore, The Guardian, May 30th 2018

  • Aggressive step in an effort to reduce $337bn US trade deficit
  • Move comes at a sensitive time in US-China relations

The White House has taken aggressive new steps in its effort to reduce a $337bn trade deficit with China, announcing that it will impose a 25% tariff on $50bn of Chinese goods containing “industrially significant technology”.

“From now on, we expect trading relationships to be fair and to be reciprocal,” Donald Trump said in statement.

The threat of new tariffs comes despite an apparent US decision, enunciated by Treasury Secretary Steve Mnuchin last week, to put a threatened trade war “on hold” as talks with China continue.

Later this week, commerce secretary Wilbur Ross is due to visit China to start a second round of talks aimed at reducing trading imbalances between the world’s two largest economies into a trade war.

The Dow Jones industrial average dropped nearly 400 points on Tuesday on mounting anxiety centered on political instability in Italy, US bank earnings and US-China trade hostilities.

In its latest statement, the White House pronounced that China had “pursued industrial policies and unfair trade practices including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field”.

The new tariffs will cover goods related to the “Made in China 2025” program the administration claims “harm companies in the United States and around the world”.

The White House statement issued on Tuesday pointed to a United States Trade Representatives (USTR) Section 301 investigation that identified four aggressive technology policies pursued by China which it claimed put 44m American jobs at risk.

The White House said the policies included forced technology transfer; requiring licensing at less than economic value; state-directed acquisition of sensitive US technology for strategic purposes; and outright cybertheft.

The full list of imports that will be subject to the 25% tariffs will be announced by 15 June, the White House said.

The announcement comes at a sensitive time in US-China relations, amid US talks with nuclear-armed North Korea as well as rising tensions in the South China Sea, where two US vessels recently sailed close to two disputed islands, prompting protest from Beijing.

The tariffs decision also comes a week after treasury secretary Stephen Mnuchin said Trump’s “trade war” with China had been placed “on hold”.

In response, China expressed surprise, saying the US move was contrary to the consensus both sides reached recently. China has the confidence, ability and experience to safeguard its core interests, it said.

Chinese state media said Beijing was ready to fight back if Washington was looking to reignite a trade war.

State news agency Xinhua said China hoped that the United States would not act impulsively but stood ready to fight to protect its own interests.

“China’s attitude, as always, is: we do not want to fight, but we are also not afraid to fight,” it said in the commentary by Xinhua reporter Yu Jiaxin.

“China will continue to hold pragmatic consultations with the United States’ delegation and hope that the United States will act in accordance with the spirit of the joint statement,” it said.

Chinese tabloid the Global Times said the United States was suffering from a “delusion” and warned that the “trade renege could leave Washington dancing with itself”.

Trump has long bemoaned the massive trade deficit with China. The White House also says the US is planning new investment restrictions and export controls. The administration is nonetheless negotiating. Commerce Secretary Wilbur Ross is expected to travel to China later in the week.

“The United States will request that China remove all of its many trade barriers,” the White House said, “including non-monetary trade barriers, which make it both difficult and unfair to do business there.

“The United States will request that tariffs and taxes between the two countries be reciprocal in nature and value. Discussions with China will continue on these topics, and the United States looks forward to resolving long-standing structural issues and expanding our exports by eliminating China’s severe import restrictions.”

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